Nearly half of American homeowners — 47%, according to a December 2025 Rocket Mortgage survey of 1,018 U.S. homeowners — said they would use some form of financing to fund a renovation, with HELOCs (13%), home equity loans (10%), and credit cards (10%) making up the bulk of that group. That finding tells a more complicated story than the headline suggests.
The other 53%? They said they would pay from personal savings. Personal savings are the most commonly cited funding method for home improvement projects across the country. But the 47% who reach beyond their bank accounts face a real decision: which financing product fits the project, the timeline, and the financial profile they’re working with? The answer depends on factors that vary from household to household — and getting it wrong can cost more than the renovation itself.
U.S. homeowners spent an estimated $608 billion on remodeling in 2025, according to Harvard’s Joint Center for Housing Studies — roughly 50% above pre-pandemic levels. With that much money moving through the market, understanding the financing options available is no longer optional. It’s practical.
Who the 47% Are: Renovators Who Reach Beyond Savings
Financing a renovation isn’t a sign of financial distress. For many homeowners, it’s a deliberate choice — particularly when a project is large enough that liquidating savings would leave them exposed to other risks.
According to Rocket Mortgage’s report on renovation costs, 75% of homeowners say they would choose a $20,000 renovation over a dream vacation, and 47% factor resale value significantly into their renovation decisions. These aren’t impulsive projects. They’re investments — and many homeowners treat them accordingly, seeking financing structures that match the long-term nature of what they’re building.
The most popular interior renovation targets in the survey were bathrooms (28%) and kitchens (25%). On the exterior, landscaping (23%) and windows or doors (21%) topped the list. Projects like full kitchen remodels or window replacements can easily exceed what most households keep liquid, which is precisely where financing enters the picture.
HELOCs: Flexibility for Projects with Uncertain Scope
Thirteen percent of financing homeowners said they would use a home equity line of credit, making it the most common debt-based option in the survey. A HELOC functions like a credit line secured by your home’s equity. During the draw period — typically five to ten years — you borrow what you need, when you need it, and pay interest only on the amount drawn.
That structure makes HELOCs particularly well-suited to projects where the final cost is hard to predict upfront. A bathroom renovation that uncovers water damage, or a landscaping project that expands in scope after work begins, doesn’t require the homeowner to apply for additional funds. They simply draw more from the existing line.
The tradeoff is variability. Most HELOCs carry variable interest rates, which means monthly payments can shift as market rates change. Homeowners who want cost certainty should weigh that carefully before committing to a line of credit over a fixed-rate product.
Home Equity Loans: Fixed Payments, Predictable Costs
Ten percent of financing homeowners said they would use a home equity loan — a lump-sum product with a fixed interest rate and fixed monthly payment over a set term. Unlike a HELOC, there’s no draw period and no variable rate exposure.
This structure suits homeowners who know exactly what a project will cost. If a contractor has provided a firm bid for a kitchen remodel, a home equity loan delivers the full amount at closing, with payments that don’t change from month to month. That predictability is valuable for households running tight budgets, or for anyone uncomfortable with rate fluctuation.
Because both HELOCs and home equity loans are secured by the borrower’s home, they typically carry lower interest rates than unsecured debt. They also come with risk: defaulting on either product can put the home itself at stake. The Consumer Financial Protection Bureau recommends that homeowners understand this distinction clearly before drawing on home equity.
Credit Cards and Personal Loans: Short-Term Projects, Short-Term Debt
Credit cards and personal loans each accounted for 10% and 7% of financing methods, respectively. At first glance, using a credit card for a renovation sounds like a poor financial decision — and for large, long-term projects, it often is. Interest rates on credit cards typically run far higher than any home equity product.
But context matters. A homeowner replacing a bathroom vanity or upgrading exterior doors for a few hundred dollars might reasonably put that cost on a card, particularly if they plan to pay the balance off within the billing cycle. For small, well-defined projects, credit cards offer speed and simplicity that equity-based products can’t match.
Personal loans occupy similar territory. They’re unsecured, so the home isn’t collateral, and approval can happen quickly. Rates are higher than home equity products but often lower than credit cards. For a homeowner who doesn’t have sufficient equity to qualify for a HELOC or home equity loan, a personal loan may be the most accessible option available.
Cash-Out Refinancing: When It’s the Smartest Move
Cash-out refinancing was the least common option, with 4% of respondents saying they would use it — not surprising given the current rate environment. A cash-out refi replaces your existing mortgage with a new, larger one — and you pocket the difference as cash. The renovation gets funded, but so does a new mortgage with a new interest rate.
When mortgage rates are significantly lower than your current rate, a cash-out refi can effectively fund a renovation while reducing your monthly payment. That scenario has been rare in recent years as rates climbed. For homeowners with older mortgages at higher rates, or for those refinancing for other reasons anyway, folding renovation costs into a new loan can make financial sense.
The math requires careful attention. Refinancing comes with closing costs, and extending your loan term means paying interest over a longer period. A homeowner who is fifteen years into a thirty-year mortgage and refinances into another thirty-year loan is resetting the clock — a cost that doesn’t always appear in the surface-level numbers.
Making the Choice That Fits the Project
No financing product is universally better than another. The right choice depends on project size, cost certainty, equity position, current mortgage terms, and risk tolerance. What the survey data makes clear is that homeowners are treating renovation financing as a practical matter — matching tools to circumstances rather than defaulting to one approach.
The $608 billion spent on remodeling in 2025 didn’t flow through savings accounts alone. It moved through credit lines, loan agreements, and refinanced mortgages. Understanding how those products work — and when each one earns its place in the decision — is what separates a well-funded renovation from a financially stressful one.
